Usually, all greenhouse gases are expressed as carbon dioxide equivalents (CO2-e) which is a metric measure used to compare the emissions from various greenhouse gases on the basis of their 'global-warming potential' by converting amounts of other gases to the equivalent amount of carbon dioxide with the same global warming potential. For example, the global-warming potential for methane is 25 and for nitrous oxide is 298. This means that emissions of 1 million metric tonnes of methane and nitrous oxide respectively is equivalent to emissions of 25 and 298 million metric tonnes of carbon dioxide.

This is why carbon offsetting is typically transacted in 'carbon', or CO2-e.

What is carbon offsetting?

It is important to reduce carbon emissions as much as practicable first. Ways to reduce carbon emissions include using renewable energy, improving energy efficiency at home and at work, avoiding unnecessary journeys using motorised transport, cycling to work, and recycling and conserving energy by turning off lights and turning down heating.

A way to reduce the impact your air travel has on the environment is to purchase emissions reductions from environmentally beneficial projects.

Permanent forests and sustainable, low-energy projects generate emission reductions that can be measured as carbon credits. These carbon credits can then be purchased by customers to address the carbon emissions from their air travel.

This concept is known as carbon offsetting. Anyone can purchase carbon credits and use them to offset their own carbon emissions.

In simple terms, offsetting one tonne of carbon means there will be one less tonne of carbon dioxide in the atmosphere than there would otherwise have been.

What are carbon credits and how do they work?

Carbon credits are issued to projects in New Zealand and overseas which can demonstrate that they have been verified to reduce or remove carbon emissions. For example, if a project has been verified to reduce emissions by 10 tonnes, then it is eligible to receive 10 carbon credits.

When you offset your carbon, you purchase and retire the equivalent amount of carbon credits, supporting projects which reduce or remove carbon emissions.

When the carbon credit is retired (or "cancelled" in some registries) it is removed from circulation in that registry and cannot be used again by another buyer.

Where do carbon credits come from?

Carbon credits are issued from projects that remove or reduce greenhouse gas emissions from entering the atmosphere or remove or absorb greenhouse gas emissions once they exist in the atmosphere. Wind farms, for example, create renewable energy and reduce the need for conventional sources such as burning coal for energy. Other offset projects that generate carbon credits include permanent forestry projects and low-carbon sustainable energy projects. The certification of these projects is important.

How is carbon offsetting transacted?

Carbon offsetting is typically transacted in metric tonnes of carbon dioxide equivalent (CO2-e). Purchasing one carbon credit means there will be one less tonne of carbon dioxide (or an equivalent greenhouse gas) in the atmosphere than there otherwise would have been. Once a carbon credit is purchased it then needs to be retired permanently to remove it from circulation, effecting the 'offset'.

How does carbon offsetting work in the context of aviation?

Air New Zealand passengers and business customers can offset the carbon emissions generated by their flights. The emissions for each flight are divided amongst the passenger seats on that flight. Each passenger can therefore pay to offset the emissions caused by their share of the flight's emissions. Passengers can offset their emissions by supporting carbon reduction projects that generate carbon credits.

Calculating emissions

How are my emissions calculated?

Emissions from Air New Zealand travel are calculated under FlyNeutral taking into account:

The distance travelled on your journey;

The class of travel you flew (whether Economy, Premium Economy or Business Premier); and

'emissions conversion factors' for greenhouse gas company reporting published annually by the UK Department for Business, Energy & Industrial Strategy (BEIS), being those recommended by the NZ Government for voluntary greenhouse gas reporting. These factors incorporate Global Warming Potentials (GWPs) from the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4).

Offsetting emissions under FlyNeutral

What are the emission reduction projects in FlyNeutral?

For more information about the emission reduction projects in FlyNeutral, click here.

How much are the carbon credits in FlyNeutral?

The price of the carbon credits Air New Zealand has sourced for FlyNeutral can be found here. This price is updated quarterly and is a blended portfolio price that represents an average cost of the credits in the project portfolio outlined further here.

What projects do the carbon credits come from in the FlyNeutral programme?

When you offset with Air New Zealand, you are purchasing carbon credits from emission reduction projects in New Zealand and in our destination network.

These projects have been selected by Air New Zealand with the support of Permanent Forests NZ Ltd (for New Zealand projects) and ClimateCare (for international projects).

All of the projects are certified to the highest national and international carbon accreditation programmes, such as the New Zealand Permanent Forest Sink Initiative and the Gold Standard.

For more information about the emission reduction projects in FlyNeutral, click here.

Who says the project reduces carbon emissions?

Carbon credits are issued from emission reduction projects that either:

are validated and verified by an approved third-party verifier as meeting globally leading carbon market industry standards such as the Gold Standard to meet the following, crucial criteria: A real project, with measurable and permanent emissions reductions, additional to a business-as-usual scenario and independently verified by a third party approved by that standard. Some standards including the Gold Standard and the CDM Standard also promote sustainable development in their emission reduction projects.

How is a carbon credit created?

Following compliance with the Permanent Forest Sink Initiative (or for the international projects, the relevant carbon standard as evidenced by third party validation and verification), carbon credits are issued on an approved registry (see below for more information about registries) with a serial number into the account of the developer of the emission reduction project.

What is the PFSI or the Permanent Forest Sink Initiative?

The Permanent Forest Sink Initiative is a programme operated by the New Zealand government which rewards landowners for permanently preserving forests that will absorb carbon dioxide from the earth's atmosphere. More information on the PFSI is available on the Ministry for Primary Industries' website.

Who sources and manages the New Zealand native forestry projects?

All New Zealand native forest restoration projects supplying carbon credits to Air New Zealand for the FlyNeutral programme are managed and sourced by Permanent Forests NZ Ltd.

Who is Permanent Forests NZ?

Permanent Forests NZ is a New Zealand-owned company specialising in the promotion and protection of forests for the role they play in reducing greenhouse gas emissions and addressing the threat of climate change.

Who sources and manages the international emission reduction projects?

All international emission reduction projects supplying carbon credits to Air New Zealand for the FlyNeutral programme are managed and sourced by ClimateCare.

Who is ClimateCare?

ClimateCare has over 20 years' experience in international carbon markets and carbon reduction programme management. ClimateCare manages a number of the world's largest carbon offset programmes on behalf of its government and corporate partners.

What is the Gold Standard?

The Gold Standard is a best practice methodology and a high-quality carbon credit label for the carbon market which promotes sustainable development in its emission reduction projects.

What are low-carbon sustainable energy projects?

Sustainable energy is energy supply that can meet the growing demand of today's people without compromising the demand of the people that might require it in future. It involves looking at multiple aspects of sustainability environmental, social and economic.

Sustainable low-carbon energy includes renewable energy generation which comes from sources that are naturally replenished soon after being used. Sunlight, wind and water are all examples of sustainable energy.

Sustainable low-carbon energy projects also include energy efficiency projects that use energy efficiently thereby reducing the need to produce more energy in the near term. Energy efficiency can refer to any project that applies new technologies, processes or practices to achieve the same outcome while using less energy. Biogas and fuel-efficient cook stoves are examples of energy efficiency projects.

What does Air New Zealand do with the money paid by customers to offset their carbon emissions?

All funds received by customers, net of tax, funds the purchase of carbon credits under FlyNeutral. Air New Zealand does not take any fees to cover the operation of FlyNeutral. All funds go directly towards the supply of the carbon credits.

Does Air New Zealand make a margin on the carbon credits purchased under FlyNeutral?

No. All funds received by customers, net of tax, go directly towards the supply of the carbon credits under FlyNeutral.

Retirement / cancellation at registry

How do I know that the carbon credits I purchase under FlyNeutral actually offset my emissions?

The carbon credits for FlyNeutral are held in carbon credit registry accounts. Once customers buy the carbon credits for offsetting under FlyNeutral, those credits are removed from circulation, effecting the offset. This means they are either retired or cancelled (credits are retired in voluntary market registries where the global projects are registered, or cancelled in the NZ Emissions Trading Register where the PFSI projects are registered). Retirements and cancellations take place on a quarterly basis.

We track all carbon credits purchased under FlyNeutral and the retirement and cancellation of them is audited every year.

In future, full public visibility of the registries where these carbon credits are will be available so that customers can view the serial numbers of the carbon credits and see that they are retired or cancelled.

How and why is a carbon credit retired or cancelled?

Retirement or cancellation of a carbon credit is the permanent removal of the credit from circulation in the registry system, effecting the 'offset'.

The carbon credits purchased by our customers for offsetting under FlyNeutral are retired or cancelled on a quarterly basis.

The IHS Markit Environmental Registry is the largest, global voluntary registry for carbon, water and biodiversity credits, measured by volume, number of environmental standards on the registry and number of customers. It provides full tracking from issuance to transfer to retirement or cancellation for more than 250 million credits.

When will the carbon credits under FlyNeutral be retired or cancelled?

Best industry practice requires that carbon credits purchased for carbon offsetting be retired or cancelled within 12 months of the period being offset. To help support customers with this, retirements / cancellations of credits will occur on a batch basis every quarter.

Other general questions

Does Air New Zealand make any money from FlyNeutral?

No. All contributions to offsetting go directly towards the supply of the carbon credits.

Does Air New Zealand offset its carbon emissions?

At Air New Zealand, we use FlyNeutral to offset the carbon emissions associated with our staff travelling for work.

Relationship of FlyNeutral with the Emissions Trading Scheme

Is FlyNeutral part of the New Zealand Emissions Trading Scheme?

No. Under the New Zealand Emissions Trading Scheme (ETS) Air New Zealand has an obligation to report the number of greenhouse gas emissions generated from its fuel use on domestic flights and provide to the government a number of emission reduction units to match that number of emissions.

Air New Zealand fully complies with its obligations under the New Zealand Emissions Trading Scheme, managing all compliance requirements at our own cost, not via a separate charge to customers. Compliance with the regulatory requirements of the ETS does not equate to offsetting.

When I offset, am I paying for Air New Zealand's emissions under the New Zealand Emissions Trading Scheme?

No. FlyNeutral operates separately to the New Zealand Emissions Trading Scheme. Funds received from customers for offsetting under FlyNeutral do not go towards our compliance costs associated with the New Zealand Emissions Trading Scheme. We comply with our obligations under that scheme and manage all compliance requirements at our cost.

Why does Air New Zealand offer the option for customers to offset their flights when Air New Zealand already fully complies with the NZ Emissions Trading Scheme?

We offer the option for our customers to offset their flights because it is important to reduce the amount of carbon in the atmosphere as soon as possible, and because compliance with the NZ Emissions Trading Scheme (NZETS) does not necessarily mean that carbon is being 'removed' from the atmosphere. The reasons for this are below.

The NZETS involves the creation and allocation of permits to emit

An emissions trading scheme helps price emissions which encourages emissions reductions by organisations and individuals. Part of an emissions trading policy involves creating 'permits to emit' and allocating these to certain organisations to help them manage the impact of a price of carbon in their business. Reducing the number of permits over time creates scarcity and therefore raises the price of them to incentivise more behavioural change.

Like most regulatory emissions trading schemes around the world, the NZETS follows this approach. The government allocates units to emitters under the NZETS giving the emitter permission to emit carbon through the newly created units. These units do not represent carbon permanently removed from the atmosphere or reduced and so they do not equate to an "offset".

The voluntary carbon market requires carbon credits used for offsetting to be real and permanent emissions reduction

Distinct from regulatory emissions trading, the voluntary carbon market is a mechanism to help individuals and organisations mitigate or reduce their carbon impact on the environment by encouraging and enabling them to purchase carbon credits ("offsets") from certified emissions reductions projects that permanently avoid or remove carbon from the atmosphere. For emissions to be ‘offset', every carbon emission has to be matched with a permanent emission reduction. i.e. the carbon credits being used for offsetting must have been certified as removing carbon from the atmosphere on a permanent basis.

Conclusion: Compliance with the NZETS does not mean emissions are offset

Due to the nature of the current design of the NZETS and because the units allocated under it do not represent a permanent emission reduction, they cannot be used for voluntary carbon offsetting.

Therefore, Air New Zealand's compliance with the NZETS through surrendering NZUs to government does not mean that Air New Zealand has 'offset' its emissions.

The carbon credits sourced for Air New Zealand's offsetting programme (FlyNeutral) are permanent emission reductions from either permanent forestry projects (issued to landowners for carbon removals from permanent forests) or global sustainable energy projects. These credits are cancelled in the carbon registry by or on behalf of Air New Zealand by ClimateCare; they not surrendered to the government for compliance with the NZETS. Therefore, any offsetting by Air New Zealand customers does not help Air New Zealand towards its compliance with the NZETS.